Solutions to infrastructure funding need to align to the country’s political and institutional environment rather than being mere transplants of foreign models.
On 15 December 2025, the cabinet approved two funds proposed in President William Ruto’s 2025 State of the Nation address: the National Infrastructure Fund and the Sovereign Wealth Fund. Together, these funds are meant to mobilize about KSh 5 trillion to finance four national priority areas: education and training, turning Kenya into a net exporter – particularly in agriculture – and expanding energy, transport and logistics infrastructure. The government has presented these funds as alternatives for financing development without further increasing the tax burden or accumulating unsustainable public debt.
At the heart of this plan is a continued push to privatize public assets. The argument is familiar: private capital will supplement limited public funds, improve efficiency in state corporations, and generate revenue that will be reinvested in public infrastructure. The National Infrastructure Fund is intended to operationalize this plan by ensuring that proceeds from privatization are channelled into public infrastructure investments, rather than being absorbed into routine government spending. But this approach hinges on assumptions that might not hold and raises a host of questions that demand scrutiny.
An unclear architecture
The cabinet approved the National Infrastructure Fund as a limited liability company with independent management, clear governance, transparency and accountability frameworks. The president’s State of the Nation address also suggested that the National Infrastructure Fund would operate within the reforms introduced in the recently enacted Government-Owned Enterprises (GOE) Act, 2025. This law governs state-owned companies expected to operate commercially, generate profit, and be largely self-financing.
But there are two critical issues if the National Infrastructure Fund is treated as a government-owned enterprise. First, its independence is uncertain. While there is the promise of a clear governance, transparency, and accountability framework, the GOE Act gives the Cabinet Secretary for the National Treasury substantial control over who leads the fund. The Cabinet Secretary will nominate the fund’s independent directors from a shortlist prepared by a panel that is also appointed by the same Cabinet Secretary. This leaves the fund’s management vulnerable to political interference.
Secondly, the Act pushes for a full transition of public assets with social functions to profit-oriented entities. Over 65 entities – including the National Housing Corporation, Kenyatta International Conference Centre, National Cereals and Produce Board, and the National Mining Corporation – will transition into profit-oriented public limited companies. According to the GOE Act, government-owned entities will be self-financing and self-sustaining. Budgetary support from the government will be limited to public service obligations, but the Act also prohibits assigning public service obligations to the entities listed. This raises a key question. Can a fund financed through privatization effectively support infrastructure for public priorities when the very institutions it invests in are barred from public service functions?
Consider the agricultural sector, which is one of the national priorities meant to benefit from the fund. If the GOE Act expressly prohibits entities such as the National Cereals and Produce Board, the Agricultural Finance Corporation, and the Agricultural Development Corporation from public service obligations, does it mean that agriculture-related infrastructure funded by the National Infrastructure Fund, including dams, will serve purely commercial purposes?
If so, where does food security fit in? Is ensuring food security a public service obligation? If so, how will the state reconcile this with the fund’s emphasis on profit returns?
The privatization of the ongoing affordable housing programme could teach us something. The National Housing Cooperation, one of the listed GOEs, was established to improve access to housing through low-cost housing. However, its transition into a full profit-making entity may undermine this very objective. This concern is growing particularly because the “affordable” houses may not be truly affordable for ordinary citizens, especially those living in informal settlements.
Overlaps and contradictions
There are other questions too, about how the National Infrastructure Fund will interact with existing institutions and laws. How will the law establishing the National Infrastructure Fund and the GOE Act interact with the Privatization Act, 2025? Many of the entities listed under the Act were among the 11 included in the 2023 National Treasury’s Privatization Programme. However, the proposed fund appears to already contradict the express provision of the Privatization Act, 2025, which requires that all proceeds from privatization be paid into the Consolidated Fund.
There is also no clear distinction between what would be allocated to the National Infrastructure Fund and the Sovereign Wealth Fund under the government’s position. In a media interview, the Cabinet Secretary for the National Treasury projected that approximately 90 per cent of privatization proceeds will go to the National Infrastructure Fund, and the remainder will be allocated to the Sovereign Wealth Fund. However, the draft Sovereign Wealth Fund Bill provides that the Sovereign Wealth Fund will receive revenue from minerals and petroleum resources, royalties, and other approved sources in three parts: infrastructure investments, an element to protect against economic shocks, and savings for future generations. This raises questions as to whether, and to what extent, the National Infrastructure Fund will overlap with the Sovereign Wealth Fund’s infrastructure investments component.
Transplanting models
Although the government is moving in the right direction to find solutions to infrastructure funding while avoiding higher taxes and rising debt, solutions need to suit local circumstances rather than being mere transplants of foreign models. The president’s 2025 State of the Nation address indicated that the proposed National Infrastructure Fund would be benchmarked on Australia’s Future Fund, the United Arab Emirate’s Mubadala, and Singapore’s Temasek.
However, Australia’s Future Fund and the UAE’s Mubadala are more accurately characterized as examples of Sovereign Wealth Funds, which invest natural resource revenues and fiscal surpluses for long-term growth. By contrast, Kenya’s proposed National Infrastructure Fund appears to closely resemble Singapore’s Temasek – a self-financing state-owned investment company that operates across diverse sectors including energy, transport and agriculture. Kenya’s fund will operate in a markedly different political and institutional environment, presenting challenges that cannot be solved through institutional imitation.
As the government leans towards privatization to promote efficiency in the management of public entities, mobilize private funding, and involve private actors in public services, it risks avoiding the core problems it should address. The government seems to have accepted that it cannot run the GOEs efficiently. Transforming Kenya into a First World country does not lie in creating, duplicating, or transplanting funds from elsewhere, but in addressing the root causes of persistent inefficiencies in public institutions.
As such, the government should invest in strengthening good governance and management to ensure the proper functioning of public entities as a long-term solution, rather than seeking efficiency through disposing public assets and creating additional opaque entities to manage the proceeds.
The recent halt of the privatization of the Kenya Pipeline Corporation due to lack of public participation raises concerns about whether future processes will ensure meaningful involvement of the public. Similarly, the proposal to sell the government’s stake in Safaricom PLC to a predetermined buyer further creates distrust and erodes public confidence in the whole privatization process. Given these gaps, it is uncertain that the National Infrastructure Fund will deliver public infrastructure aligned with the four national priorities. As innovative as the strategy sounds, these critical issues remain unclear and the government should reconsider whether the fund is meant to shield Kenyans from tax burdens and further national debt or to shield public funds from public scrutiny. The Elephant
